Wednesday 28 September 2011 17.16 EDT
First published on Wednesday 28 September 2011 17.16 EDT

Jeff Bezos has been reading The Remains of the Day. A novel of quiet subtlety. Or so the Amazon boss told the audience at a press conference in Manhattan on Wednesday. From his actions, it seems more likely that he has been at the Sun Tzu.

Bezos made a bid to be the new Steve Jobs, declaring war on Apple with the launch of a cut-price rival to the iPad, with the two technology titans now squaring up over who will own the device that delivers the future of music, movies and TV online.

The $199 (£128) colour touchscreen tablet called the Kindle Fire was unveiled at a press conference in New York with all the secrecy and prerelease teasing Apple usually sprinkles on its launches.

The new Kindle is far less advanced than the iPad. It doesn't offer a mobile connection, working only with Wi-Fi; it doesn't have a camera or microphone; and its screen, at 7 inches, is smaller than the iPad, at 9.7 inches.

However, at half the price, analysts said it presents the first serious challenge to the iPad's dominance of the tablet market, as Bezos tries to build on the success of his company's Kindle book reader with a colour-screen, multimedia offering for US consumers. In Britain, buyers will have to wait until next year at the earliest.

Janney Capital Markets analyst Shawn Milne said he expects between 2 million and 3 million Kindle Fire tablets will be shipped in the fourth quarter. Others are aiming higher. "At $199, the Fire is sure to be a highly disruptive product in the tablet market, particularly in the lead-up to Christmas," said David McQueen of Informa Telecoms & Media.

Bezos revealed the device after introducing a new range of simpler Kindles, one of which will be available in the UK for £89 from 12 October. But it was the Kindle Fire that seized the limelight: a device intended to build on the popularity of the company's e-readers and reach a broader audience that wants to browse the web, listen to music and watch movies and video. The device will also feature a news stand for users, stocking Kindle Fire-friendly versions of titles from publishers including versions of Cosmopolitan, Vanity Fair, Wired and Glamour.

The event had echoes of one of Jobs's famous Apple presentations. Bezos, dressed causally in open-neck shirt and jeans, went for a slow reveal. First there was a history of the Kindle and a chance for Bezos to display some of the unkinder comments people had made about the best selling e-book reader when it was launched. Then came the new generation of Kindles, and finally Kindle Fire. And then the price. "We're building premium products at non-premium prices," said Bezos. "We are determined to do that."

Bezos also announced a new web browser, called Amazon Silk, which he said was tailored for mobile devices, as the company that was once just an electronic shop also encroached on territory once dominated by Microsoft. "It's truly a technical achievement," he said.

He then took a swipe at Apple, saying there would be no need to synchronise the Kindle Fire to a computer, as people do with their iPads. "That model, that you are responsible for backing up your own content, is a broken model," he said.

Michael Gartenberg, analyst at Gartner, said the announcement pitched Apple and Amazon head to head in the battle for "cloud" media services. Both Apple and Amazon have been developing services that allow customers to store their music, movies and TV shows remotely – "in the cloud" – and then access them from any device connected to the web. Next week, Apple is expected to respond, with more details of its inevitably-named iCloud service next week. "For me, that was the most significant part of the announcement," said Gartenberg. He said the Kindle Fire looked like a good product and was priced to sell, but the real battle was "in the cloud".

Amazon plans to begin taking orders for the Fire on its US website immediately, and will start shipping on 15 November. Bezos said the company was "making many millions of these" – but Amazon has no immediate plans to launch the Fire in the UK.

Reaction at the event was mixed. Avram Piltch, editorial director at Laptop Magazine, said the device looked "more like an iPod killer than an iPad killer". He said the Kindle Fire looked set to be a big seller for people who want to use it to consume media, but it didn't have enough firepower to take on the iPad or other tablet manufacturers who were making devices for people at work rather than play.

The new Kindle has its work cut out for it. Apple sold more than 29m iPads in the product's first 15 months on the market. Most of its competitors have bombed. Hewlett Packard scrapped its tablet device in an embarrassing U-turn that contributed to the ousting of its chief executive. Blackberry maker Research in Motion shipped just 200,000 of its own rival to the iPad, the PlayBook, in three months.

But, said Gartenberg, Amazon has one big advantage over the other would-be iPad killers: content. "Amazon has millions of customers already buying their stuff. It has their credit card details, it knows their names. That's a big advantage," he said.

Next Tuesday, Apple will have its chance to respond – except that its big launch for Christmas is the latest version of the somewhat smaller iPhone. The battle has just begun.